Warburg Pincus exits Metropolis

Private equity company Warburg Pincus has sold off its 27 per cent stake in pathology lab chain Metropolis Healthcare to one of the promoters, the Sushil Shah family, for an undisclosed amount.

Independent sources said the chain has a turnover of about Rs 550 crore and was valued between Rs 1,500 crore and Rs 1,800 crore a few months ago. Metropolis, one of the three leading path labs in India, has 125 laboratories and 750 collection centres.

"The shares have been acquired by me and my family and we are very excited about the new phase of growth in Metropolis and the industry," Ameera Shah, Managing Director and Chief Executive of Metropolis Healthcare, said in a press release. She said the company is now supported by independent directors and has the backing of other marquee investors including KKR and industrialists.

Sources said ICICI Venture had invested Rs 35 crore in Metropolis in 2006 for around 20-25 per cent stake. This was sold to Warburg Pincus in 2010, which invested close to $85 million (then about Rs 392 crore) in 2010.

The firm was started in 1998 by G.S.K. Velu, promoter of Chennai-based medical devices company Trivitron and pathology specialist Dr Sushil Shah, as a 50:50 venture. Eight years later, ICICI Venture invested in the company and, in 2010, this stake was bought out by Warburg Pincus. Prior to forming Metropolis, Sushil Shah was running the South Mumbai based lab 'Dr Sushil Shah's Pathlab', operating since 1981. In the early 2000s, its turnover was around Rs 6-7 crore.

Velu had stepped down as Managing Director of Metropolis a few years ago, after Ameera Shah, daughter of Sushil, returned from the US.

A few months ago, there were reports that Velu was planning to exit the company following differences among the promoters. "I will not exit Metropolis as it is a growing company," Velu had told Business Today then.

"The decision to invest in Metropolis in 2010 was based on our thesis that demand for and growth trends in medical diagnostics will continue and that Metropolis was well positioned to benefit", said Niten Malhan, Managing Director, Warburg Pincus India.